Atomically dispersed transition metal-nitrogen-carbon catalysts are emerging as low-cost electrocatalysts for the oxygen reduction reaction in fuel cells. However, a cost-effective and scalable synthesis strategy for these catalysts is still required, as well as a greater understanding of their mechanisms. Herein, iron, nitrogen co-doped carbon spheres (Fe@NCS) have been prepared via hydrothermal carbonization and high-temperature post carbonization. It is determined that FeN4 is the main form of iron existing in the obtained Fe@NCS. Two different precursors containing Fe2+ and Fe3+ are compared. Both chemical and structural differences have been observed in catalysts starting from Fe2+ and Fe3+ precursors. Fe2+@NCS-A (starting with Fe2+ precursor) shows better catalytic activity for the oxygen reduction reaction. This catalyst is studied in an anion exchange membrane fuel cell. The high open-circuit voltage demonstrates the potential approach for developing high-performance, low-cost fuel cell catalysts.